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Selling a Rental Property with Tenants 2

Posted on May 26, 2015 by Tiffany C. Wright

 

House occupied by tenant

Whether or not you sell with a tenant depends on who your intended buyer is, investor or occupant.

If selling as a rental, keep the tenants.

If you want to sell a rental property as rental, you should definitely sell it with the tenant in the property, preferably with at least six more months before the lease ends. Because a long-term tenant ensures that the new landlord does not have to immediately tend to a vacant property and search for tenants, you will sell your property sooner. This, of course, assumes that you have a good tenant who pays rent timely and takes care of the property.

If selling to a homeowner, have the tenants move.

If, instead, you intend to sell to an owner-occupant, you should take immediate steps to get your tenant to move. The fastest way to do this is to ask the tenant to move out so you can move in. In some jurisdictions, you must actually move in (partially is fine) or your former tenant can accuse you of fraud. Typically, you’ll need to clean, paint, etc. to restore the home to its full glory as a primary residence.

Determine who your target buyer is, in advance.

Because of the distinct differences between selling to a landlord and selling to an owner-occupant in how you approach a sale, you must determine who your target is in advance, based on the market information, and act accordingly. Does the area have a high number of renters or does the house produce above market rental income? Sell to a landlord. Is the rent you command low or is your home the only or one of few rentals in the area? Sell to an owner-occupant.

Encourage your tenant to cooperate.

To get your tenant to cooperate: If you have a great tenant, offer to extend the lease at the same rent for a few months, offer to provide something for free that the tenant has requested in the past, offer free lawn care or a housekeeping service for 2-3 months. Be creative and provide solutions to your tenant’s concerns that get you what you want – in other words, a win-win situation.

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